HM Revenue and Customs has made sweeping cuts to the interest it charges on late tax payments. From 24 March, new rates will cover all late payments across a range of taxes and national insurance.

The interest rate for late payments of income tax, national insurance contributions, capital gains tax, stamp duty and overpaid tax credits due to fraud will drop from 3.5 per cent to 2.5 per cent.

Interest charged on late payments of inheritance tax, capital transfer tax and estate duty will also fall on 24 March from 1 per cent to 0 per cent.

Paying your corporation tax late will incur interest at 1.5 per cent, down from 2 per cent, and Revenue and Customs has also dropped the rates on petrol revenue, customs duty, environmental levies and excise duty by between 0.75 and 1 per cent.

The news follows the announcement earlier this year that Revenue and Customs would stop paying interest on taxes that had been overpaid. The controversial move, introduced in January, means UK taxpayers no longer receive interest on money the taxman holds due to accidental overpayment of a number of taxes, including income tax, national insurance contributions, capital gains tax, stamp duty, stamp duty land tax and stamp duty reserve tax.

For more information on the rates affected and for details of your tax liabilities, go to: www.hmrc.gov.uk